A farmer in his combine makes a pass through a field in the river bottoms Monday just north of the Kansas River. Crop land prices in the Midwest have risen by more than 25 percent during the last 12 months, a new report by the Federal Reserve Bank of Kansas City has found.

Midwest farmers are certainly growing corn, wheat and soybeans, but now there are questions about whether they’re nurturing a real estate bubble as well.

A new report by the Federal Reserve Bank of Kansas City found that crop land prices in the Midwest have risen by more than 25 percent during the last 12 months. It was the highest rate of increase ever monitored by the Kansas City Fed.

“There are people out there looking for alternative investments to the stock market right now,” said Kelvin Heck, a broker with Lawrence’s Colliers International. “Land is still something they aren’t making any more of, and I think some people are buying it just like gold as a hedge against bad times.”

The Federal Reserve report estimated that in Kansas, non-irrigated crop land increased by 20 percent for the year, irrigated crop land by about 15 percent and pasture land by about 12 percent.

In the Douglas County area, the market is more mixed. Heck said the market for fertile bottom ground in the Kansas River has been active, and prices likely have been increasing near the rates suggested by the Federal Reserve.

But the price for less fertile property outside of the river valleys has seen less of an increase, said Dale Bohn, an appraiser with Frontier Farm Credit. Bohn said those types of properties have been hurt by the slowdown in new housing growth. That’s because many of those type of properties in Douglas County aren’t just bought as farm land but also are used for rural housing.

But Bohn agreed with the Fed’s assessment that land being bought for truly agricultural purposes is increasing rapidly in value.

“We’ve been seeing some record income levels for farming the last few years,” Bohn said.

Strong commodity prices, especially for corn during the ethanol boom, have helped drive up land prices. The Fed noted that Nebraska has seen crop land values increase by about 40 percent for the year.

Heck said he had heard reports of even more rapidly increasing prices in Iowa, saying that some bottomland in Iowa has sold for $16,000 an acre. For comparison, Douglas County bottomland is more likely to sell for about $4,500 an acre, he said.

The rapid increase has some in the agricultural industry watching the situation closely and hoping that a 1980s-style agriculture bubble doesn’t emerge. Lenders said the agriculture industry is far less leveraged than it was in the 1980s, which is leading many to hope that any bursting of a bubble won’t be as devastating as it was 30 years ago.

“But the pendulum always swings too far in these sorts of things,” Bohn said. “I don’t know how far agriculture land values have to rise before it happens — it may be 5 percent higher or 50 percent higher — but it will get to the point that the pendulum swings the other way.”

Tom Dillon, president of Baldwin State Bank, said he thinks area farmers aren’t likely to drive up land prices too much in the coming year. He said area farmers did not have a particularly good year in 2011 because of the dry conditions.

“If they would have just grown an average crop they would have been sitting pretty right now,” Dillon said. “But they didn’t get the rain when they needed it, and based on what has gone on this fall, I don’t think you’ll find many farmers real optimistic about next season either.”